Dollars and Cents

4 Men with 4 Very Different Incomes Open Up About the Lives They Can Afford

The poverty line for a family of three is $20,090 a year. The median household income in America is $53,657. Politicians draw $250,000 as the line between the middle and upper classes. And the true starting point of real wealth remains a cool $1,000,000. We asked four more or less typical men, each of whom earns one of these incomes, to tell us about the lives they can afford.

$1,000,000 Per Year – Tim Nguyen, 35

Location: Huntington Beach, California

Occupation: Business owner, CEO/cofounder of BeSmartee, a DIY mortgage marketplace

Do you keep a budget? We track every single penny that comes in and out of our bank account. And we give 6 percent of our money away to charity. We have a big heart for animals, children, the elderly, the underprivileged.

What’s a weekly grocery bill for you? I break it down monthly. We eat mainly at home. We spend around $1,200 a month.

One thing your family needs but can’t afford: There’s nothing that we need that we can’t afford. Anything reasonable I can afford.

One thing you want but can’t afford: The thing that keeps me up at night is wanting to retire my parents. There’s a certain dollar figure that would allow me to pay off all their debts. That’s my first goal: to retire my parents so they can be independent and just live their lives.

The last thing you bought that required serious planning: We budget our money all the time, so we’ve already been planning for everything—I could tell you exactly where all my money is going over the next five years.

Do you have credit cards? I have one credit card. It’s cash for points, so we charge everything on the card and pay it off at the end of the month.

How much debt are you carrying now? Less than 10 grand.

Saving for retirement? Yes. [I’ve put away] north of $5 million.

At what age would you like to retire? I’ll always be working. As far as working on a start-up, I want to be done with that in five or 10 years. But as far as working, investing in real estate, things of that nature, you can do that until you’re 90.

College plans for your kids? We set up a trust with our attorney where our kids will have money for college. But they’ll only get more than that if they achieve their milestones, such as getting a certain GPA or volunteering in the community. We want our kids to be good citizens. They can’t be spoiled brats. We want them to understand what it means to work and to earn your way to the top. We put the rules in place to help reinforce that.

Looking at your current career prospects, how much money do you think you’ll be earning in ten years’ time? My goal is to have a net worth of $150 to $200 million.

How happy are you on any given day, on a scale of one to ten? I’d say eight or nine. Lately, with the start-up, I’ve been putting in two to three hours more per day than I’d like, and that’s taking away from family time. So if I could get those two or three hours back, I’d be a happy man.

How often do you worry about money? Maybe once a week. I’ve been broke before. I’ve refinanced my house to pay my employees. I’ve been through all that—that was me worried. Now, because I’m able to forecast and plan my money better, there’s not as much worry.

How much money do you think you’d need to have the life you want? I need about 25 [million]. That includes retiring my parents, an upgraded home, and enough money to make sure my kids have funds available when they want to start their own businesses. There’s a certain amount of money you need to live the life you want. Beyond that, it’s really a game, and money is the scoreboard.

Do you think your taxes are too high? I’m happy with taxes. I had a really good year when I was 22 or 23—I made about 250 grand—and I came home and complained to my dad about it. I said, “I can’t believe I’m paying all those taxes! Half the money is gone!” And my dad said, “You should feel lucky that you live in a country where you can pay taxes”: He came from a communist-run country. Ever since that day, I never complain about my taxes.

$250,000 Per Year – Yakov Villasmil, 41

Location: Miami

Occupation: Real Estate Agent

Family Status: In a relationship; one son, 10 years old

Monthly rent: $2,000

Do you keep a budget? Yes, I’m very organized with it. Overall, my fixed expenses are about $7,000 a month. They include rent and about $1,000 a month for transportation, $180 a month to the cleaning lady, $200 for gas for the vehicle, and a handful of little things—$300 a month for Netflix, Pandora, Skype, subscriptions like that.

What’s a weekly grocery bill for you? I would say about $200 a week.

One thing your family needs but can’t afford: Nothing.

One thing you want but can’t afford: I’m a fan of watches, and there’s a Cartier that just came out that’s about $10,000. It’s not that I can’t afford it; it’s just not a priority right now.

The last thing you bought that required serious planning: I spend money traveling every year, and that’s something I put some thought into. Last December, I went to Austria, Slovenia, and Italy.

Do you have credit cards? Fifteen.

How much debt are you carrying now? $7,700 on one card, and it should be paid off by the end of the month.

Saving for retirement? I am saving, but not for retirement. I’m saving up to buy an apartment building, which will give me another stream of income. My money is all in play right now to make more money. The kind of life that I want to live when I retire is not one I have to manage by having, you know, a million dollars and 3 or 4 percent [interest]. It’s not going to happen.

At what age would you like to retire? I don’t think that I want to retire.

But say you did: At what age would you be able to retire? I want to be financially free by age 50.

College plans for your kid? No, but it’s all part of making sound investments.

Looking at your current career prospects, how much money do you think you’ll be earning per year in 10 years’ time? In 10 years’ time, I want to have $50,000 a month from apartment buildings,and another $50,000 a month from the real estate business. A million-five per year is the goal.

How often do you worry about money? Every single day. Every single minute. I always want more, and every single day I’m thinking, “What’s the next move?”

How much money do you think you’d need to have the life you want? At this point in my life, if I had $600,000 yearly income, I would have the life that I want to be living. But then again, when I get there, I’ll want to buy the jet.

How happy are you, on a scale of one to 10? I’m a good nine every day.

Do you think your taxes are too high? You know what? No, I don’t think they’re too high. I remember I had a boss about 10 years ago who said, “You guys complain about the taxes being taken out—if you don’t want them to take that much, just make less.”

$53,000 Per Year – Michael Greene, 48

Location: Brooklyn

Occupation: Concierge for a property-management group

Family status: Married with 3 children (a 21-year-old stepson and 8-year-old twin girls)

Monthly rent: $1,000

Do you keep a budget?

We do. Because of the size of our family, we have to budget at least $150 per month for BJ’s [Wholesale Club]. BJ’s is our friend; we have to buy in bulk.

What’s a weekly grocery bill for you? Probably in the range of $100 to $125.

One thing your family needs but can’t afford: A ranch-style home, four to five bedrooms, two to three bathrooms. I’d love to stay in Brooklyn, but right now the asking price is between $500,000 and $600,000.

One thing you want but can’t afford: I’ve always liked Volvos. If I could get a big, six-seater Volvo, that would be nice. In my color: navy blue. With a little TV in the back for the kids.

The last thing you bought that required serious planning? We bought bedroom sets for ourselves and our girls four years ago. Our set was between $5,000 and $6,000, with the dressers and everything. Our girls’ little beds—which they’re about to outgrow now—we got a better deal for them: around $2,000 or $2,500. I had to go into my savings a bit to get it, but we got it. We got it done.

Do you have credit cards? Just one. A Chase Visa. I’m definitely on top of my monthly payments, and I try not to go anywhere past $300 to $400 a month. That would be stretching it. And I have to thank my wife for that. She helps me stay focused.

How much debt are you carrying now? No credit-card debt, but I definitely still have a student loan from the mid-nineties that I’m trying to bang out. I think I still have seven G’s left.

Saving for retirement? Yes, I am. Our company offers a 401(k) plan, and our union offers one, so I have two separate running retirement plans. Gotta do it. I don’t know how much is in there at the moment.

At what age would you like to retire? I’m 48 now. Realistically, I’d say I wouldn’t want to go past 60. But I think I’m looking at 60 before I’ll be able to retire.

College plans for your kids? We have a college plan in place for the girls. I put away money biweekly—$75 to $100.

How much money do you think you’ll be earning per year in 10 years’ time? I’d love to say I’ll be making double if not more than double what I’m making now.

How often do you worry about money? Money is not something that I stress over.

How much money do you think you’d need to have the life you want? I’m not a greedy guy. Because of my upbringing, where we learned how to do more with less, and with the times and the economy we live in now, my family and I could be very comfortable at $200 to $250K a year. I could be very comfortable with that.

How happy are you, on a scale of one to ten? Eight.

Do you think your taxes are too high? Yes. Yes. Yes. Yes.

The Poverty Line (Or: $7 An Hour Plus Tips) – Demetrius Campbell, 25

Location: Chicago

Occupation: Bar-back at the Signature Lounge in the John Hancock building

Do you keep a budget? No, but I have been working on trying to recently. I know I have to pay bills for food, for clothes, gas. It’s a lot of things that go into budgeting. It’s hard to plan for, because you never really know what you’re going to need to spend money on. And the amount of money I make varies, because I work different hours. The biggest two-week check I’ve had so far is $250.

What’s a weekly grocery bill for you? In a week, about $130 to $140—that’s when I have the money to spend. I’m on food stamps, and I get $400 a month through EBT.

One thing your family needs but can’t afford: I don’t really think about stuff like that. I just try to make do with what I have. I feel like I’m just working to pay for the bills. I don’t even have time to spend with my family—to take them out to certain places.

One thing you want but can’t afford: I’d buy a newer-model car. And every time those commercials come on TV—the Pillow Pets—my kids always ask for those. It’s discouraging, having to tell them all the time that we can’t afford things.

The last thing you bought that required serious planning: I bought a TV—a Black Friday deal. It’s a Vizio 39-inch. I paid like $250. I had to work for it. I saved up.

“Do you have credit cards? No.

How much debt are you carrying now? I’m in a lot of debt. I have traffic tickets, hospital bills, old phone bills. I’m pretty sure that my debt from the tickets alone is oughly $3,000. By the time you get the money to pay the ticket, the fine has doubled. Then you get another one and can’t pay that one. Like, I’m on a boot [booted vehicles] list, and I got the money to get off the list, but my car got towed that morning, so I had to pay half that money to get it out of the impound. It just keeps going like that.”

Saving for retirement? No. Retirement is a long ways from now.

At what age would you like to retire? As young as I can and still have money. Probably late 60s.

College plans for your kids? I’ve thought about it. Once I get all my debts paid off and I’m in a better place, I’ll start putting as much money as I can toward it. I’ll take steps to put myself in better standing.

How much money do you think you’ll be earning peryear in 10 years’ time? My goal is to triple what I’m making now.

How often do you worry about money? Always. Living like this is hard to do.

Does money ever keep you up at night? I can say that it has. It’s a lot of things building up—having the money when the bills are due, having a ticket, and not being able to pay it before it doubles.

How much money do you think you’d need to have the life you want? 50 to 60 thousand a year.

How happy are you, on a scale of one to 10? I’d say a seven or eight. But you might get lucky and catch me on 10 now and then.

This is life on $7.50 an hour

https://youtu.be/-SCB1t28nDU

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Switzerland will become the first country in the world to hold a nationwide referendum on the introduction of a basic income on Sunday.
The proposal, if passed, would give every adult legally resident in Switzerland an unconditional income of 2,500 Swiss francs (£1,755; $2,554) a month, whether they work or not.Supporters point to the fact that 21st-Century work is increasingly automated, with more and more traditional jobs, in factories, retail and even in finance and accounting, being done by machines. And they do not need salaries.The campaign has staged some eyecatching demonstrations, including one in which hundreds of “robots” danced through the streets of Zurich, promising to “free” humans from the daily grind of Monday to Friday work, just to pay the bills.”The robots are saying ‘we don’t want to grab your work and make you suffer’,” said campaigner Che Wagner. “We want to make you free, that’s why they want a basic income for us humans.”

A Guaranteed Income for Every American
Replacing the welfare state with an annual grant is the best way to cope with a radically changing U.S. jobs market—and to revitalize America’s civic culture

When people learn that I want to replace the welfare state with a universal basic income, or UBI, the response I almost always get goes something like this: “But people will just use it to live off the rest of us!” “People will waste their lives!” Or, as they would have put it in a bygone age, a guaranteed income will foster idleness and vice. I see it differently. I think that a UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society.

The great free-market economist Milton Friedman originated the idea of a guaranteed income just after World War II. An experiment using a bastardized version of his “negative income tax” was tried in the 1970s, with disappointing results. But as transfer payments continued to soar while the poverty rate remained stuck at more than 10% of the population, the appeal of a guaranteed income persisted: If you want to end poverty, just give people money. As of 2016, the UBI has become a live policy option. Finland is planning a pilot project for a UBI next year, and Switzerland is voting this weekend on a referendum to install a UBI.

The UBI has brought together odd bedfellows. Its advocates on the left see it as a move toward social justice; its libertarian supporters (like Friedman) see it as the least damaging way for the government to transfer wealth from some citizens to others. Either way, the UBI is an idea whose time has finally come, but it has to be done right.

First, my big caveat: A UBI will do the good things I claim only if it replaces all other transfer payments and the bureaucracies that oversee them. If the guaranteed income is an add-on to the existing system, it will be as destructive as its critics fear.

Second, the system has to be designed with certain key features. In my version, every American citizen age 21 and older would get a $13,000 annual grant deposited electronically into a bank account in monthly installments. Three thousand dollars must be used for health insurance (a complicated provision I won’t try to explain here), leaving every adult with $10,000 in disposable annual income for the rest of their lives.

People can make up to $30,000 in earned income without losing a penny of the grant. After $30,000, a graduated surtax reimburses part of the grant, which would drop to $6,500 (but no lower) when an individual reaches $60,000 of earned income. Why should people making good incomes retain any part of the UBI? Because they will be losing Social Security and Medicare, and they need to be compensated.

The UBI is to be financed by getting rid of Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare. As of 2014, the annual cost of a UBI would have been about $200 billion cheaper than the current system. By 2020, it would be nearly a trillion dollars cheaper.

Finally, an acknowledgment: Yes, some people will idle away their lives under my UBI plan. But that is already a problem. As of 2015, the Current Population Survey tells us that 18% of unmarried males and 23% of unmarried women ages 25 through 54—people of prime working age—weren’t even in the labor force. Just about all of them were already living off other people’s money. The question isn’t whether a UBI will discourage work, but whether it will make the existing problem significantly worse.

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Some people who would otherwise work will surely drop out of the labor force under the UBI, but others who are now on welfare or disability will enter the labor force.PHOTO: GETTY IMAGES
I don’t think it would. Under the current system, taking a job makes you ineligible for many welfare benefits or makes them subject to extremely high marginal tax rates. Under my version of the UBI, taking a job is pure profit with no downside until you reach $30,000—at which point you’re bringing home way too much ($40,000 net) to be deterred from work by the imposition of a surtax.

Some people who would otherwise work will surely drop out of the labor force under the UBI, but others who are now on welfare or disability will enter the labor force. It is prudent to assume that net voluntary dropout from the labor force will increase, but there is no reason to think that it will be large enough to make the UBI unworkable.

Involuntary dropout from the labor force is another matter, which brings me to a key point: We are approaching a labor market in which entire trades and professions will be mere shadows of what they once were. I’m familiar with the retort: People have been worried about technology destroying jobs since the Luddites, and they have always been wrong. But the case for “this time is different” has a lot going for it.

When cars and trucks started to displace horse-drawn vehicles, it didn’t take much imagination to see that jobs for drivers would replace jobs lost for teamsters, and that car mechanics would be in demand even as jobs for stable boys vanished. It takes a better imagination than mine to come up with new blue-collar occupations that will replace more than a fraction of the jobs (now numbering 4 million) that taxi drivers and truck drivers will lose when driverless vehicles take over. Advances in 3-D printing and “contour craft” technology will put at risk the jobs of many of the 14 million people now employed in production and construction.

The list goes on, and it also includes millions of white-collar jobs formerly thought to be safe. For decades, progress in artificial intelligence lagged behind the hype. In the past few years, AI has come of age. Last spring, for example, a computer program defeated a grandmaster in the classic Asian board game of Go a decade sooner than had been expected. It wasn’t done by software written to play Go but by software that taught itself to play—a landmark advance. Future generations of college graduates should take note.

‘Under my Universal Basic Income plan, the entire bureaucratic apparatus of government social workers would disappear, but Americans would still possess their historic sympathy and social concern’

—Charles Murray
Exactly how bad is the job situation going to be? An Organization for Economic Cooperation and Development study concluded that 9% of American jobs are at risk. Two Oxford scholars estimate that as many as 47% of American jobs are at risk. Even the optimistic scenario portends a serious problem. Whatever the case, it will need to be possible, within a few decades, for a life well lived in the U.S. not to involve a job as traditionally defined. A UBI will be an essential part of the transition to that unprecedented world.

The good news is that a well-designed UBI can do much more than help us to cope with disaster. It also could provide an invaluable benefit: injecting new resources and new energy into an American civic culture that has historically been one of our greatest assets but that has deteriorated alarmingly in recent decades.

A key feature of American exceptionalism has been the propensity of Americans to create voluntary organizations for dealing with local problems. Tocqueville was just one of the early European observers who marveled at this phenomenon in the 19th and early 20th centuries. By the time the New Deal began, American associations for providing mutual assistance and aiding the poor involved broad networks, engaging people from the top to the bottom of society, spontaneously formed by ordinary citizens.

These groups provided sophisticated and effective social services and social insurance of every sort, not just in rural towns or small cities but also in the largest and most impersonal of megalopolises. To get a sense of how extensive these networks were, consider this: When one small Midwestern state, Iowa, mounted a food-conservation program during World War I, it engaged the participation of 2,873 church congregations and 9,630 chapters of 31 different secular fraternal associations.

Did these networks successfully deal with all the human needs of their day? No. But that isn’t the right question. In that era, the U.S. had just a fraction of today’s national wealth. The correct question is: What if the same level of activity went into civil society’s efforts to deal with today’s needs—and financed with today’s wealth?

The advent of the New Deal and then of President Lyndon Johnson’s Great Society displaced many of the most ambitious voluntary efforts to deal with the needs of the poor. It was a predictable response. Why continue to contribute to a private program to feed the hungry when the government is spending billions of dollars on food stamps and nutrition programs? Why continue the mutual insurance program of your fraternal organization once Social Security is installed? Voluntary organizations continued to thrive, but most of them turned to needs less subject to crowding out by the federal government.

This was a bad trade, in my view. Government agencies are the worst of all mechanisms for dealing with human needs. They are necessarily bound by rules applied uniformly to people who have the same problems on paper but who will respond differently to different forms of help. Whether religious or secular, nongovernmental organization are inherently better able to tailor their services to local conditions and individual cases.

Under my UBI plan, the entire bureaucratic apparatus of government social workers would disappear, but Americans would still possess their historic sympathy and social concern. And the wealth in private hands would be greater than ever before. It is no pipe dream to imagine the restoration, on an unprecedented scale, of a great American tradition of voluntary efforts to meet human needs. It is how Americans, left to themselves, have always responded. Figuratively, and perhaps literally, it is in our DNA.

Regardless of what voluntary agencies do (or fail to do), nobody will starve in the streets. Everybody will know that, even if they can’t find any job at all, they can live a decent existence if they are cooperative enough to pool their grants with one or two other people. The social isolates who don’t cooperate will also be getting their own monthly deposit of $833.

Some people will still behave irresponsibly and be in need before that deposit arrives, but the UBI will radically change the social framework within which they seek help: Everybody will know that everybody else has an income stream. It will be possible to say to the irresponsible what can’t be said now: “We won’t let you starve before you get your next deposit, but it’s time for you to get your act together. Don’t try to tell us you’re helpless, because we know you aren’t.”

The known presence of an income stream would transform a wide range of social and personal interactions. The unemployed guy living with his girlfriend will be told that he has to start paying part of the rent or move out, changing the dynamics of their relationship for the better. The guy who does have a low-income job can think about marriage differently if his new family’s income will be at least $35,000 a year instead of just his own earned $15,000.

Or consider the unemployed young man who fathers a child. Today, society is unable to make him shoulder responsibility. Under a UBI, a judge could order part of his monthly grant to be extracted for child support before he ever sees it. The lesson wouldn’t be lost on his male friends.

Or consider teenage girls from poor neighborhoods who have friends turning 21. They watch—and learn—as some of their older friends use their new monthly income to rent their own apartments, buy nice clothes or pay for tuition, while others have to use the money to pay for diapers and baby food, still living with their mothers because they need help with day care.

These are just a few possible scenarios, but multiply the effects of such interactions by the millions of times they would occur throughout the nation every day. The availability of a guaranteed income wouldn’t relieve individuals of responsibility for the consequences of their actions. It would instead, paradoxically, impose responsibilities that didn’t exist before, which would be a good thing.

Emphasizing the ways in which a UBI would encourage people to make better life choices still doesn’t do justice to its wider likely benefits. A powerful critique of the current system is that the most disadvantaged people in America have no reason to think that they can be anything else. They are poorly educated, without job skills, and live in neighborhoods where prospects are bleak. Their quest for dignity and self-respect often takes the form of trying to beat the system.